Mobile Insurance: Past, Present & Future 13 November 2014 Peter Gross Regional Director – MicroEnsure Africa
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Mobile Insurance:
Past, Present & Future
13 November 2014
Peter Gross
Regional Director – MicroEnsure Africa
MicroEnsure Overview: by the Numbers
Founded in 2002 by Opportunity International
2007 Gates grant, 2012 conversion to for-profit social enterprise
Investors: IFC, Omidyar Network, Opportunity, Telenor, Sanlam, AXA
Design, implement and operate micro insurance products worldwide
15 million customers in Africa/Asia, growing by 1 million per month
85% of customers are new to insurance
Cover various classes of risk: life, inpatient/outpatient health, crop, political violence, micro asset, accident/disability, “decongestion”
50,000 claims paid in past year
90 banking and microfinance partners
70 insurance partners
12 telecom partners
3-Time Winner of Financial Times/IFC Awards
Innovative, SUAVE
Products
High-Volume Systems
Underwriting Strength
Market Knowledge
Speed, Efficiency,
Agility
Customer Value
Robust Operations
MicroEnsure Business Model
Mobile Insurance Product Design
Innovative, SUAVE
Products
Insurance must work like any other mobile offering.
- Explainable in full in one minute or less: bought, not sold - Exciting to the customer base - Customer service that is fast and helpful - Customisable by the technical service provider on a moment’s notice
Mobile insurance defies the traditional insurance rules.
Claim Forms
Exclusions
Medical Exams
Waiting Periods
ID Numbers 20-Page Policies
MicroEnsure Mobile Insurance History
Tigo Family Care Ghana, Tanzania
MTN Mi Life Ghana
yuCover Kenya
TNM Malawi
Grameen – phone
Bangladesh
Telenor Pakistan
August 2010 March 2011 Oct 2011 Apr 2013 July 2013 Nov 2013 Life Only Life Only Life + PA Life Only Life Only Life Only Free + Paid Paid (MM) Free Free Free + Paid Free + Paid 2 Lives 2 Lives 1 Life 2 Lives 1 Life 1 Life
MicroEnsure Mobile Insurance History
Tigo Family Care Ghana, Tanzania
MTN Mi Life Ghana
yuCover Kenya
TNM Malawi
Grameen – phone
Bangladesh
Telenor Pakistan
August 2010 March 2011 Oct 2011 Apr 2013 July 2013 Nov 2013 Life Only Life Only Life + PA Life Only Life Only Life Only Free + Paid Paid (MM) Free Free Free + Paid Free + Paid 2 Lives 2 Lives 1 Life 2 Lives 1 Life 1 Life
MicroEnsure involvement ended 2013…
What We Learned: Tigo, MTN, yuMobile
- We didn’t add enough value to defend our position or IP - Telecoms are volatile: we have to connect to viable brands - There must be a balance between high touch and low touch - Product value and customer throughput are keys to viability
What the Market has Learned
- Mass market customers do not wake up wanting to buy insurance
- The mobile channel is not a quick fix: it can make a bad product worse
- Mobile involves systemic risk: product failures can materially impact markets
- Customers expect mobile insurance to work like other mobile products, not like other insurance products
- Freemium is hard, but a better model
MicroEnsure Mobile Insurance - Past 12 Months
8 million new enrolled policy
holders
2 more launches scheduled in 2014
Product Example – Ghana “3 for Free”
Phase 1 – January 2014
Phase 2 – November 2014
Double Cover – pay GHS 1 per month to double your 3 for Free Cover: enjoy up to GHS 5,000 in life, accident cover and GHS 300 hospital cash
Family Cover – pay GHS 3 per month to double your 3 for Free Cover and give them same coverage
to a loved one
Monthly Recharge Life Cover Accident Cover
Hospital Cash
GHS 5 – 9.99 GHS 250 GHS 250 GHS 25
GHS 10 – 19.99 GHS 500 GHS 500 GHS 50
GHS 20 – 49.99 GHS 1,250 GHS 1,250 GHS 100
GHS 50 and up GHS 2,500 GHS 2,500 GHS 150
Product Example – Ghana “3 for Free”
Partner Value Chain
Airtel Product marketing (ATL/BTL),
monthly subscriber data, insurance premium payment,
Tier 1 customer service
MicroEnsure
Product & Process Design, Pricing, Training, Customer
Field Engagement, USSD/SMS, Tier 2 Customer Service, Policy
Administration, Claims Management, Impact and Risk Monitoring, KPI Measurement
Insurance Company
Product and Pricing Approval, Underwriting, Local Risk
Carrier, Regulatory Liaison
Product Example – Ghana “3 for Free”
A few insights after 1 year:
• 1,000% increase in claims*
• 450% increase in policy volumes*
• 80% Reduction in Technical Service Provider (TSP) Expense*
• Sustained ARPU and Churn Value • ATL Marketing = Wide Awareness • Multiple risk coverage is in more
demand than single risk coverage • Claims payments in 78 minutes
* As compared to a similar product in Senegal
Airtel Nigeria – TV Commercial
MicroEnsure Mobile Operations
Robust Operations
Field Engagement:
People + Technology
Claims Payment in 100 Minutes
“Careful” Customer Service
Risk Management: Fraud + Brand
Mobile Insurance and Claims
Loss Incurred
First Claim Report
Claim Documents Received
Claim Paid
Mobile Insurance
Typical Claims Experience
1-2 Days 3-5 Days 1-2 Hours
10-15 Days 40-45 Days 72 Hours
Policy terms aren’t clear, report has to be made in person at insurer office
Claimants go through many rounds of document
review with insurer; insurer keeps asking for additional documents
Clock only starts when ALL documents received; claims processed through multiple
departments
Customer knows exactly what cover she has, with no fine print, and claims are reported easily via
phone
A proactive customer service process and clear directions on document/s
required allows for faster claims submission
MicroEnsure performs most claims analysis
before final document receipt, earns payment authority from insurer
50-70 Days from Loss to Payment
4-7 Days from Loss to Payment Community Impact
Claimant Frustration
Building Trust and Education through Claims
Designing benefit-rich products, and paying 1,000’s of claims, while mitigating fraud, requires deep technical knowledge of insurance, the low-income market, and robust operations.
Mobile Insurance Market Discussion
Where We All Agree: • Freemium products create value
via ARPU and Churn, but telecom willingness to pay has limits
• Freemium models increase basic financial inclusion
• Mobile is about brand, scale, cost and access
• Freemium products lead to more paid sales than paid products alone
• Mobile money premium payments are not a panacea
Room for Debate: • Does free insurance create any real,
lasting value? • Does product value matter? • Do claims matter? • Where is the value: underwriting
profit or telecom/policyholder value? • High touch or low touch sales? • Should mobile insurers work with
regulators to mitigate systemic risk? • Are insurers sufficiently involved? • What is the appropriate role for TSPs? • Will telecoms integrate backward?
Agreed: Freemium Insurance Works
Increased ARPU and decreased churn leads to an excellent return for the telecom…
While financial inclusion & insurance penetration skyrocket as claims are paid…
-
100.000
200.000
300.000
400.000
500.000
600.000
0,0% 2,0% 4,0% 6,0% 8,0%
10,0% 12,0% 14,0% 16,0% 18,0%
Jan Feb Mar Apr May Jun
Oct Nov Dec Jan Feb Mar Apr May June
Average Recharge per User (ARPU)
Control All Insured
Insurance Launched
Debated: High Touch vs Low Touch
High Touch
Product value must be low (i.e. personal accident):
agents ‘educate’ the market - 10X sales rate
Sales and Administration
represents up to 90% of premium
End Result: Systemic Risk
Low(ish) Touch
Product value must be high (i.e. Three for Free):
claimants and brand staff educate the market
Sales and Administration
represents up to 30-40% of premium
End Result: Sustainability
Freemium Insurance Moving Forward
Three for Free The more you top up, the more you
earn
Pay cents per day and double the free
cover you earn
Earn up to $5,000 in insurance
Buy additional cover for a family member
Buy additional types
of cover: health, device, travel…
Free insurance is not the goal: it is the spearhead of market penetration
Database mining is key
Beyond Mobile: The Future is Bright
Twitter: @microensure [email protected] [email protected] +254 786 499 100
Barclays Salary Accounts WWBG Deposit Accts
NWK Zambia Agricultural Loans
Opportunity Int’l Micro Loans
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